Former ANC policy tsar Joel Netshitenzhe delivered a candid address to the BEE commission in which he admitted that the ANC’s BEE policy was never designed to benefit the majority of South Africans, who remain trapped in poverty and locked out of opportunity.
Nor was the policy intended to resolve unemployment, address basic service delivery issues or improve public safety, according to Netshitenzhe. Yet this very policy has been used across all these governance areas to capture procurement processes, extract rents and plunder public resources.
A glaring example of this was disclosed during the recent sessions of the parliamentary ad hoc committee examining the capture of the criminal justice system, where further disclosures about the awarding of a R360m tender by the South African Police Service (SAPS) to Vusimusi “Cat” Matlala allegedly included a R500,000 payment to former police minister Bheki Cele for “consulting services”.
Instead, Netshitenzhe argues that “postcolonial class formation has to include, as a core element, the emergence, or creation, of a cohort of black capitalists, the so-called black capitalist class”. He went further to say that “we cannot hope to have a stable capitalist system in which blacks are the country’s numerical majority and yet a tiny minority among the capitalist and elite social strata”.
Stripping away his unnecessarily complicated language, he reveals that this policy was intended to replace one politically connected elite with another, the proverbial passing of the baton from the National Party and Broederbond of yesteryear to the cadres of Luthuli House.
His statement lends further credence to the DA’s argument that BEE was crafted by big business to capture the post-democratic political elite, to prevent the emergence of more radical economic policies, and to preserve the economic status quo. A policy never designed to reduce poverty has, unsurprisingly, failed to reduce poverty, and in many cases has actively deepened it. That is why, despite 35 years of informal and formal BEE policies, the unemployment rate among black South Africans remains at 37%, and 64% live below the upper-bound food poverty line.
These economic indicators pose a profound threat to South Africa’s stability. When unemployment and poverty remain entrenched for decades, frustration hardens into anger and anger into instability. Yet the ANC’s political elite remains so insulated by its own privilege that it cannot see what ordinary citizens experience daily.
Ordinary voters understand this reality better than the ANC’s own leadership. The Social Research Foundation recently conducted polling to measure voters’ attitudes towards political parties and their policy choices. One of the questions it asked was whether voters agreed or disagreed with the DA’s proposal to replace BEE with a poverty-based policy to target those truly in need, arguing that BEE benefits an elite.
In response, 67.5% of all voters strongly or somewhat agreed with the proposal, and even more revealing was that 61% of ANC voters strongly or somewhat agreed. These results show just how out of touch the ANC’s political elite is with its own voter base. While they grandstand and posture to defend their privilege, voters across all walks of life are saying we want genuine empowerment now.
Genuine empowerment begins with value for money. The state must purchase goods and services from companies that are cost-effective, technically competent, reliable and fully compliant with the law. For years, BEE has driven up prices, reduced competition and rewarded political loyalty rather than capability.
The International Monetary Fund estimates that 1%-3% of GDP in savings can be achieved by adopting a value-for-money approach to procurement policy. This amounts to roughly R70bn-R210bn in savings, which could be used to provide better quality goods and services to the poor.
Value for money must be complemented by economic inclusion. This can be achieved by awarding companies that do business with the state preferential points if they reinvest in our country’s many impoverished communities through job creation, skills development, infrastructure investment, integrating small businesses into their value chain, and feeding schemes.
Instead of granting ANC cadres nominal ownership through equity deals, we should expand employee share ownership schemes that give real workers a real stake in the companies they help build. Evidence from global and local studies shows that shared ownership improves performance, increases efficiency and spreads wealth far more broadly.
Finally, we need to exclude those who are guilty of corruption, fraud and misrepresentation. To stop the Cat Matlalas of this world from enriching themselves at the expense of the poor, South Africa must finally graduate from the failed system of BEE and embrace an economic inclusion model that delivers for all.
• Cuthbert is a DA MP and head of policy with the DA Federal Policy Unit.
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